Tag: factory

OM in the News: Changing How Factories Schedule Employees

Until last April, there had really been just two ways to make 350,000 pounds of cheese a day at the Land O’Lakes plant in Melrose, Minn,: Start at 5 in the morning and work till 5 at night, or the other way around.

Rigid factory shifts were the default for churning out cheddar, as they are at factories the world over that make all kinds of products. “The most efficient way to keep production humming uninterrupted, 24 hours a day, 7 days a week, is to start and end in unison, bundling dozens of individuals’ efforts into a single unit of labor,” writes The Wall Street Journal (March 11, 2024).

The rigid schedule makes sense logistically. Each day, 70 or so trucks from member farms empty milk at the Melrose plant. Converting the unending inflow of milk into 500-pound blocks of cheese requires running the factory 24 hours a day. Divvying the day up into 2 shifts makes it easier for supervisors to ensure sufficient staffing.

But in recent years, the plant has struggled to find candidates willing to work full-time—a problem emerging across the company–and the country. There are less and less people going into manufacturing every year. And, like many employers, Land O’Lakes found its rigid traditional shift system buckling.

When companies need to boost hiring, higher wages are usually the lever they pull because it’s logistically easier to adjust to higher labor costs. But “giving workers more control over their schedules is a very valuable aspect of the job,” says a Land O’Lakes executive. Now employees choose their own start times and shift lengths.  Part time positions proved easier to fill than full-time openings, and had the knock-on benefit of boosting retention.

There are some trade-offs. The company needs 2 or 3 flex workers for every full-time employee, raising the cost of training. There are also increased costs that come with figuring out the weekly shifts. Some of this, however, is offset by cutting back on overtime pay.

Flex employees work with their supervisors every couple of weeks to choose their shifts. The supervisors then cobble together the schedule each day of the week, ensuring that all positions are covered.

Factories all over the U.S. are hiring only 6 people for every 10 openings posted, compared with 8 or 9 a decade ago. And some 2.5 million factory workers will retire by 2030, contributing to a shortage of around 2.1 million manufacturing jobs.

Classroom discussion questions:

  1. This system works well in the service sector, but will it work in all manufacturing companies?
  2. Why is there a shortage of manufacturing workers?

OM in the News: China Finally Has a Rival as the World’s Factory Floor

Western companies are desperately looking for a backup to China as the world’s factory floor, a strategy widely termed “China plus one.” India is making a concerted push to be the plus one, writes The Wall Street Journal (May 10, 2023).

Employees test mobile phones at a Foxconn plant in Sriperumbudur, India

Only India has a labor force and an internal market (population) comparable in size to China’s. Western governments see democratic India as a natural partner, and the Indian government has pushed to make the business environment more friendly than in the past.

It scored a coup with the decision by Apple to significantly expand iPhone production in India.  Now it will boost iPhone production to around 20 million units annually in India and triple the number of workers to 100,000. Apple had previously built up a state-of-the-art supply chain almost entirely in China to make its laptops, iPhones and accessories. Its presence helped the entire manufacturing sector in China.

China still towers over every other country in global manufacturing, a position it cemented when multinationals flooded in after it joined the World Trade Organization in 2001. But a growing list of factors has prompted companies to search for a backup. First, there were rising labor costs in China and pressure from the Chinese government to transfer technology to Chinese competitors. Then there were President Trump’s tariffs on Chinese imports in 2018, Covid lockdowns from 2020 through last year, and now a push by Western governments to decouple their economies from China.

Many countries are competing to be the “plus one,” with Vietnam, Mexico, Thailand and Malaysia in particular contention.

India must still overcome entrenched problems that have kept it a bit player in global supply chains. Its labor force remains mostly poor and unskilled, infrastructure is underdeveloped and the business climate, including regulations, can be burdensome. Manufacturing remains small relative to the size of India’s economy. It can take longer to get land and approvals to set up a factory in India and getting visas for expatriate technicians, managers and engineers is time consuming.

Nonetheless, it is making progress. Its manufactured exports were barely a tenth of China’s in 2021, but they exceeded all other emerging markets except Mexico’s and Vietnam’s. The biggest gains have been in electronics, where exports have tripled since 2018.

Classroom discussion questions:

  1. Why are companies now looking to India and away from China?
  2. Compare India to Mexico as an alternative location for a U.S. manufacturer.

OM in the News: Robots May Build Your Next House

An electrician checks her blueprint at Baltimore’s Blueprints Robotics factory.

“The future of U.S. homebuilding may depend on robots,” writes Businessweek (April 24-30, 2017). With construction workers in short supply and demand rising, builders are turning to “fast factories” that can build houses like cars on an assembly line, using robots to fire 1,000s of nails into studs each day without missing. Other machines cut, sand, drill, and insulate. The plants enable developers to fill the labor gap by having houses and apartment buildings manufactured off-site, for less money and in a fraction of the time. Even Marriott Hotels is increasingly turning to modular construction.

Builders hire the factories to manufacture homes in sections, which are transported on trucks, then laid down on foundations by cranes, like giant Legos. Sometimes the modules are fully framed rooms, complete with tile showers and gourmet kitchens. The house is 60% complete when it arrives. The idea of transporting homes in prefabricated sections has roots in the early 1900s, when homesteaders could buy kits from a Sears Roebuck catalog for assembly on their newly acquired plots of land. In the 1980s and 1990s, it became increasingly popular to build lower-cost homes in factories.

Today’s plants are capable of producing bigger buildings with more elaborate designs. The Blueprint Robotics factory in Baltimore is one of the first in the U.S. to use robots. Taller multifamily buildings, dorms and hotels are increasingly being manufactured indoors. And so are mansions that sell for millions. Having an indoor facility means weather delays are rarely a factor. Each worker is given a narrow concentration, like tiling floors or sanding drywall, which increases production speed. People without any background in construction can become skilled laborers in 2 weeks.

Classroom discussion questions:

  1. Provide 2 other examples of fixed position layout (see Chapter 9).
  2. What are the disadvantages of this automated, modular approach?

OM in the News: Ergonomics for an Aging Workforce

aging factory workerIt’s no secret the exodus of retirement-age workers and their considerable knowledge is placing a strain on manufacturing companies around the globe. Less discussed, but just as real, reports Industry Week (Aug., 2013), are the challenges being presented by aging workers still employed on the manufacturing floor — and the design changes workplaces should be considering to keep these valuable employees productive and in the game.

“With this shift, we first must appreciate the difference between the younger and aging person, and then make sure we design accordingly so that these differences don’t become an obstacle,” says ergonomics expert Lance Perry.

Xerox, for example, has taken ergonomic measures to address its older population. In its 2012 environment, health and safety report, the company noted that musculoskeletal disorders continue to represent about half of its work-related injuries and illnesses, which, says Xerox, “is why we have strong processes to reduce ergonomic stresses in the workplace. Those strong processes include an ergonomic training program designed to provide simple ergonomic strategies, as well as awareness of the normal aging process, to reduce personal risk to employees.”

“Many people view the aging workforce as a liability, and to some extent it might be, but it is also an opportunity,” adds Perry. “This is where your experience lies, this is where your job knowledge lies, this is where, in some respects, loyalty lies.” Ultimately, Perry advises manufacturers to consider what design changes they can make to retain valuable, but aging, knowledge workers. “What can you do to keep them on the job longer and still be productive and safe in the process?”

Discussion questions:
1. Why is ergonomics an important issue for operations managers?

2. What kind of ergonomics designs can help older workers?

OM in the News: Ethical Issues and Bengladesh’s Clothing Factories

Factory workers in Dhaka, bangladesh
Factory workers in Dhaka, Bangladesh

A group of 17 major North American retailers, including Wal-Mart, Gap, Target and Macy’s, just announced a plan to improve factory safety in Bangladesh, drawing immediate criticism from labor groups who complained that it was less stringent than an accord reached among European companies. The American plan, according to The New York Times (July 11, 2013), commits $42 million for worker safety, including inspections and an anonymous hot line for workers to report concerns about their factories, and more than $100 million in loans and other financing to help Bangladeshi factory owners correct safety problems. But unlike the accord joined mainly by European retailers, the plan lacks legally binding commitments to pay for those improvements.

Labor rights groups estimated that it would cost as much as $3 billion to bring Bangladesh’s garment factories up to an acceptable safety standard.  “Wal-Mart, Gap and the corporations that have chosen to join them, are unwilling to commit to a program under which they actually have to keep the promises they make to workers and accept financial responsibility for ensuring that their factories are made safe,” stated five of the groups. They faulted the plan for being “company-developed and company-controlled,” adding that “under the Gap/Wal-Mart scheme, brands and retailers are not obligated to pay one cent toward the renovation and repair of their factories in Bangladesh.”

The problems in Bangladesh’s garment industry have not affected the retail industry’s demand for cheap goods made there. Exports in June rose 16.3% to $2.7 billion, based on strong clothing sales. Bangladesh has quickly grown into the world’s 2nd largest apparel maker after China. But in a race to keep up with demand, many older buildings that lacked structural support were converted into factories, and building codes were ignored.

Discussion questions:

1. What is the responsibility of US and other firms that contract to have their products made in Bangladesh.

2. Are the critical labor rights groups correct in that US firms need to make stronger commitments to revamping the infrastructure?